We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

Free Trading Guides
Oil - US Crude
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
More View more
Real Time News
  • Commodities Update: As of 19:00, these are your best and worst performers based on the London trading schedule: Oil - US Crude: -0.04% Gold: -0.55% Silver: -2.17% View the performance of all markets via https://www.dailyfx.com/forex-rates#commodities https://t.co/uxXP4RiYVd
  • It's been a while since I checked the monthly chart of $EURUSD. Here it is with the 12-bar (12 month) ATR - wandering at the lowest level on record https://t.co/Z5mtDPoY1r
  • The $USD dropped lower after this morning’s consumer confidence figure from the conference board crossed the wires at 130.7, missing expectations of 132.2. Get your market update from @FxWestwater here: https://t.co/YticpX7b20 https://t.co/Hb2PoU8pWF
  • White House Advisor Kudlow: - Further travel restrictions are being discussed - BBG
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Ripple are long at 96.80%, while traders in USD/CAD are at opposite extremes with 69.82%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/zZ5C4ppXAd
  • The S&P 500 continues to push lower in afternoon trading as coronavirus fears accelerate $SPX $SPY https://t.co/pXPtu8oAx1
  • Indices Update: As of 19:00, these are your best and worst performers based on the London trading schedule: France 40: -0.63% Germany 30: -0.71% US 500: -2.30% Wall Street: -2.41% View the performance of all markets via https://www.dailyfx.com/forex-rates#indices https://t.co/WHb5mPP0Hj
  • The 3-day rate of change on the $SPX is matching the extremes of Dec 2018 and Feb 2018. If the selloff continues into the close, it will qualify as the worst stretch over that period since Aug 2015 https://t.co/5FsNK8CcHQ
  • White House Advisor Kudlow: - No expectation for Fed to make panic move - Economic growth in second half of year to be helped by trade agreements - BBG
  • Here we go... Coronavirus expected to cause five-week electronics products shipment delays according to an IPC survey $QQQ $AAPL
Trade Wars and Tariffs Have Put the US Auto Industry in Peril

Trade Wars and Tariffs Have Put the US Auto Industry in Peril

2019-05-29 18:05:00
Peter Hanks, Junior Analyst

Auto Industry Outlook:

  • Ford and General Motors have enacted a series of job cuts, but still lag the S&P 500
  • The US-China trade war, USMCA uncertainty and slowing global growth are headwinds for the sector
  • Retail traders are overwhelmingly short the Dow Jones, find out how to use IG Client Sentiment Data with one of our Live Sentiment Data Walkthroughs

Trade Wars and Tariffs Have Put the US Auto Industry in Peril

The US auto industry is in peril despite efforts from the Trump administration to bolster the sector and revert manufacturing back to domestic plants. That said, the two largest US auto manufacturers, Ford and General Motors, have performed admirably in the year-to-date. Ford has climbed 11.5% while GM is just 3% higher. By comparison, the S&P 500 has enjoyed a rally of more than 10.5%. While the gap may not seem large given that the auto industry is a mature one and demand is cyclical, the picture is direr over a wider timeframe.

S&P 500 Price Chart: Daily Time Frame (March 2018 - May 2019) (Chart 1)

auto stock price chart

Since President Trump announced steel and aluminum tariffs on March 1, 2018, Ford has slipped -2% and GM has slumped roughly 6%. In the same period, the S&P 500 has posted a gain of 2.35%. Still, stock prices do not reflect the whole story.

In a move that drew the ire of President Trump, General Motors announced on February 4 it would cut 4,000 jobs in an effort to restructure. Often, layoffs cause a bump in stock price – as fat is trimmed and costs are reduced. After the announcement on February 4, GM shares rallied roughly 2% - offsetting some of the pain from the tariff headwinds.

View A Brief History of Trade Wars for insight on economic conflicts of the past.

Similarly, Ford announced its own round of job cuts on May 20. The auto manufacturer released plans to eliminate 10% of its salaried workforce, which translates to nearly 7,000 jobs. The plan will reach completion at the end of August 2019. The announcement is supplemental to an earlier decision by the company to begin cutting nearly 20,000 jobs earlier in 2019.

Announced Automotive Cuts

Trade Wars and Tariffs Have Put the US Auto Industry in Peril

Challenger, Gray & Christmas

According to outplacement firm Challenger, Gray & Christmas, the auto industry is cutting workers at the quickest rate since the Great Financial Crisis as auto cuts surge 207% over the last year. While part of the restructuring can be attributed to increased automation and industry change, the headwinds from tariffs and prolonged uncertainty have undoubtedly weighed on other industries – some of which are direct suppliers to US automakers.

Domestic Steel Produces Slip

Steel producers that conduct most of their business in the United States like US Steel (X), Nucor (NUE), AK Steel (AKS) and Steel Dynamics (STLD) find themselves in a similar position to the US auto industry. Since the United States announced steel and aluminum tariffs on March 1, 2018, the four steel companies have shed nearly -12% each.

S&P 500 Price Chart: Daily Time Frame (March 2018 – May 2019) (Chart 2)

steel producer price chart

The steel and aluminum tariffs have not only impacted the manufacturers directly but have been passed on to auto manufacturers, increasing costs which thereby decreases margins. The knock-on effect has weighed on two key industries in the manufacturing sector and the impact of tariffs has started to spill into other sectors like retail.

Although a key headwind was lifted with the removal of metal tariffs on Mexico and Canada, USMCA remains unratified. Further, the steel and auto stocks above enjoyed very little reprieve following their removal. Now, the industries must grapple with increased levies between the United States and China – along with a 6-month period of uncertainty regarding auto tariffs on the European Union and Japan.

These sector-specific themes fall against a backdrop of slowing global growth. Together, waning demand and rising costs will continue to pressure a sector that was forced into a bailout during the Great Financial Crisis. Should renewed pressure befall the stock market, the beleaguered industry will have to enact even greater change if it is to avoid a similar fate. As these themes unfold, follow @PeterHanksFX on Twitter for updates and analysis.

--Written by Peter Hanks, Junior Analyst for DailyFX.com

Contact and follow Peter on Twitter @PeterHanksFX

Read more: What if Mexico, Canada Join the US in the Trade War with China?

DailyFX forecasts on a variety of currencies such as the US Dollar or the Euro are available from the DailyFX Trading Guides page. If you’re looking to improve your trading approach, check out Traits of Successful Traders. And if you’re looking for an introductory primer to the Forex market, check out our New to FX Guide.

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.


News & Analysis at your fingertips.